(Solved): 1. Consider the graph below which illustrates a given firm's AP and MP curves: a. At what level of ...

1. Consider the graph below which illustrates a given firm's AP and MP curves: a. At what level of output is AVC minimized? Explain your answer. b. When 15 workers are hired, what is the firm's \( A V C \) if \( w=300 \) ? c. When 15 workers are hired, what is the firm's \( S M C \) if \( w=300 \) ? d. When 40 workers are hired, is AVC increasing or decresing? Explain your answer. 2. Suppose the firm's production function is \[ Q=2 K L \] where \( Q \) is units of output, \( K \) is units of capital and \( L \) is units of labor. Let \( K \) be fixed at 2 units, i.e., \( \bar{K}=2 \). a. What is the firm's short-run production function? b. Derive and graph the firm's Average Product curve and the Marginal Product curve. Put \( A P \) and \( M P \) in the same graph. c. What is different about these \( A P \) and \( M P \) curves? Do they look like regular \( A P \) and \( M P \) curves? d. Does the firm experience diminishing marginal returns? Why or why not. Explain. Florida Fabrication and Design produces industrial supplies. After two quarters of increasing levels of production, the CEO was upset to learn that, during this time of expansion, the marginal productivity of the newly hired workers declined. Believing that the new works were either lazy or ineffectively supervised (or possibly both!), the CEO instructed the factory foreman to "crack down" on the new workers to bring their productivity levels up. Explain carefully in terms of production economics why it might be that no amount of "cracking down" can increase marginal worker productivity.